Spooner and Whittle (Child support)

Spooner and Whittle (Child support) [2019] AATA 6348 (2 December 2019)

DIVISION:Social Services & Child Support Division
REVIEW NUMBERS:  2019/PC016391 and 2019/PC016586
APPLICANT:  Mr Spooner
OTHER PARTIES:  Child Support Registrar
Ms Whittle

REVIEW NUMBER:  2019/PC016650
APPLICANT:  Ms Whittle
OTHER PARTIES:  Child Support Registrar
Mr Spooner

TRIBUNAL:Member S Hoffman
DECISION DATE: 2 December 2019
DECISION:

The tribunal sets aside the decision under review and, in substitution, decides as follows:

· For the period 4 December 2017 to 30 November 2021, Mr Spooner’s adjusted taxable income is varied to $21,726.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – benefits derived from business – adjusted taxable income of the liable parent varied - decision under review set aside and substituted

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

This review is about the child support assessment in respect of two children, aged 15 and 11 years old. The case started on 19 August 2004 with the father being the paying parent and the Department of Human Services – Child Support Agency (the CSA) responsible for collecting child support from 12 November 2012.
According to CSA records (up to an including an assessment notice issued 12 September 2019), for the period relevant to this review, the mother provided 100% care for the older child and 80% for the younger child; the father provided 0% care for the older child and 20% care for the younger child.
On 4 December 2017, the father lodged an application for a change of assessment with the CSA. At that time the father was required to pay $7,377 a year in child support, based on his adjusted taxable income of $71,256 as per a previous change of assessment decision, and the mother’s 2016/17 taxable income of $110,664.
On 10 January 2018 a senior case officer from the CSA decided there were no grounds to depart from the administrative assessment. This means there was no change to the child support assessment then in place.
The father objected to that decision and on 15 March 2018, an objections officer disallowed the objection, meaning the previous decision was not changed (the first objection decision).
On 27 November 2018 the father lodged an application for review with the Administrative Appeals Tribunal (the tribunal). An extension of time application was heard and granted.
Just prior to that, on 25 October 2018 the father lodged another change of assessment application with the CSA. The mother cross-applied. At that time the father was assessed to pay an annual rate of child support of $7,568 based on an income for him of $72,396 and the mother’s 2017/18 adjusted taxable income of $110,622.
A decision was made on 18 February 2019 such that for the period from 25 October 2018 to 30 April 2023, the father’s adjusted taxable income was varied to $121,696, subject to an annual increase from 1 January 2020 in line with the CSA’s child support index.
The father objected to that decision on 6 March 2019. On 17 May 2019 an objections officer allowed the objection and set aside the decision of 18 February 2019 as if it had not been made. The child support assessment reverted to what it had been (the second objection decision).
On 24 May 2019 the father lodged an application for review of the second objection decision with the tribunal and the mother lodged her application for review on 31 May 2019.
A directions hearing was held on 4 September 2019 in relation to all three applications, after which directions were issued. The matter was heard on 30 October 2019. Both parties attended via conference telephone and gave sworn evidence.
The tribunal had before it documents provided by the CSA as follows:
· PC016391 pages 1 to 539; and 539 to 707.
· PC016586 and PC016650 pages 1 to 642; and 609 to 659[1]
[1] There appears to have been an error in the numbering of the CSA documents.
The father submitted documents numbered A1 to A130, and the mother submitted documents numbered B1 to B11. Copies of the documents were sent to the parties before the hearing.
After the hearing, as discussed during it, the parties were directed to provide further documents. The father’s post-hearing submissions were numbered A131 to A136 and the mother’s were numbered B12 to B20. These were then sent to the other party for comment. Both parties responded by making further submissions, copies of which are attached to these Reasons for Decision (numbered A137 and B21 to B23).
The tribunal made its decision on 2 December 2019.

ISSUES

The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act1989 (the Act). The Act provides for an administrative assessment of child support to be paid. Pursuant to section 98C of the Act, a decision to depart from the administrative assessment may be made if the following three requirements are met:
i.A ground is established; and
ii.It would be just and equitable as regards the child, the liable parent and the carer entitled to child support to make a particular determination; and
iii.It would be otherwise proper to make a particular determination.
The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.
If the tribunal is satisfied that the three requirements are met, it may make one of the determinations prescribed in section 98S of the Act, which include variations to the annual rate of child support payable, or to the adjusted taxable incomes of the parents and/or carer, or to other components of the statutory formula used to calculate child support.

CONSIDERATION

Issue 1 – Does a ground exist to depart from the administrative assessment?

Subparagraph 117(2)(c)(ia) of the Act provides a ground for departure exists where, in the special circumstances of the case, the administrative assessment of child support would result in an unjust and inequitable determination of the rate of child support because of the income, property and financial resources of either parent or because of the earning capacity of either parent.
It was noted in the objection decision made on 17 May 2019 that there had been 11 previous change of assessment decisions in this case, a number of which have been objection decisions.
An application for review of a CSA objection decision was heard by the Social Security Appeals Tribunal (SSAT), and a decision made, in March 2015.[2] A copy of this decision is included in the CSA documents provided for review number PC016391.
[2] The Social Security Appeals Tribunal (SSAT) amalgamated with the AAT and other tribunals as at 1 July 2015. The Social Services and Child Support Division of the AAT performs the same function as the former SSAT.
The first change of assessment application relevant to this review process was lodged 4 December 2017. Generally the tribunal will not consider changing an assessment for periods prior to the date of lodgment, as parents should be able to rely on the child support assessment notices they receive and be able to budget accordingly, unless and until they become aware the other parent is seeking change in the assessment. Generally a parent is expected to lodge a change of assessment application in a timely fashion, rather than delay it and then request a retrospective change.[3]
[3] The legislation allows the CSA to go back 18 months from the date of the lodgment of the change of assessment application. If a parent is seeking changes to assessments from before the 18 months, they can apply to a court for leave to do so.
In giving his evidence, the father described a change in his employment that occurred in November 2017 and affected his income. This is set out in more detail below. Given that the parents were familiar with the change of assessment process, having participated in so many previously, and that he lodged a change of assessment application on 4 December 2017 following a change in his circumstances, the tribunal is satisfied that it is appropriate to start its determination from that date and not earlier.
The tribunal notes that the mother contended that the father has not complied with his obligation to make full and frank disclosure of his financial circumstances to the tribunal, for the purposes of the review. The tribunal agrees that the father did not fully complete all the forms sent to him and did not submit certain documents after the hearing, although he said he would do so at the hearing.
The second objection decision made mention of the difficulty in ascertaining the father’s income for child support purposes. It recorded that he was a director and [another role] for two companies, a member and director of two superfunds, and a trustee to two trusts. That decision did not name the businesses and trusts, instead referring to them as Business 1, Superfund 1 and so forth.
It was noted that according to Australian Taxation Office (ATO) records, Business 1 had ceased, Business 2 had lodged its 2016/17 tax return which showed income of $85,149 matched by expenses in the same amount, and that its 2017/18 tax return had yet to be lodged.
Superfund 1 had not lodged a tax return since the 2013/14 tax year and Superfund 2 had not lodged one since 2012/13. Trust 1 had not lodged a tax return since 2012/13. A new ABN application was made from 1 April 2019, with a new business role [in a specified] industry. Trust 2 had not lodged a tax return since the 2015/16 tax year.
On the other hand the tribunal observes that the CSA documents include a large amount of financial information provided by the father to the CSA, or obtained by them, over many years, including copies of documents that were lodged with the Family Court of [state]. The father also submitted the following documents to the tribunal:
·     Balance sheets and profit and loss statements for years ending 30 June 2017, 2018 and 2019 for:
o[Trust 3]
o[Business 3]
o[Trust 4]
·     The father’s personal tax returns for 2017, 2018 and 2019;
·     An analysis of income earned by the father during 2017/18 and 2018/19 which supported the turnover figures as they appeared in [Business 3] profit and loss statements.
The tribunal is satisfied that the father has submitted sufficient evidence for its purposes. It notes that the tribunal has the benefit of financial statements which, it seems, were not made available to the objections officer; that decision was made before the end of the 2018/19 financial year.
The father wrote that he set up the [Trust 3] and [Business 3] before he met his wife in July 2012. In the past he derived his income mainly through [Business 3].
With regard to [Trust 4], according to a letter dated 16 April 2019 to the CSA, [Business 4] is the trustee for [Trust 4]. It was submitted that [Trust 4] had taken out a mortgage and used that to purchase a property from the father. He used the proceeds of the sale to pay out his personal mortgage. That property is now rented out, at a loss. The arrangement concerning [Trust 4] was considered by the SSAT as noted in its decision made March 2015 which found that the father’s interest in [Trust 4] was “limited to being an eligible beneficiary”. The SSAT accepted that the father had not received a distribution from [Trust 4]. The financial statements for 2017, 2018 and 2019 for [Trust 4] record losses each year and there is no reference to distributions being paid. The tribunal is satisfied that the father has not received a benefit from [Trust 4] during the period relevant to this review, and it need not consider [Trust 4] further in relation to the father’s income, property and financial resources.
The father set out his work history at the hearing, an account which the tribunal found to be credible: it made sense of the figures; it was consistent with what he has told the CSA over a number of years; and reflects the difficulties often faced by people with the father’s profile when looking for employment. He is [age] years old. He submitted that his highest educational qualification is a [specified qualification] which used to be sufficient for obtaining well-paying roles in the [specified] sector but that had not been the case for some years.

What is the father’s income for child support purposes?

The father’s taxable income in recent years was as follows:
·     2012/13     $174,821
·     2013/14     $90,058
·     2014/15     $46,622
·     2015/16     $43,966
·     2016/17     $46,038
·     2017/18     $12,375
·     2018/19     ($2,829)
The father set up [Business 3] in 2011. The father’s income was earned by contracting to various companies and his fees were paid to [Business 3]. In a written submission dated 30 September 2019, the father stated that [Business 3] was deregistered by ASIC as it could not pay its filing fees/penalties. According to ASIC records, its ABN status was cancelled [in] August 2019. The father also wrote that any income he earns will be paid to [Trust 3] which is running at a loss and there was no personal services income (PSI) payable to him.
According to the profit and loss statements for [Business 3], consulting income for 2017/18 and 2018/19 was $62,719 and $26,197 respectively, and expenses were $324,902 and $28,924 respectively. The expense figure of $324,902 included a provision for a non-recoverable loan of $261,195. After that provision is removed from the expenses, they amount to $63,707. Compared to income of $62,719, this gives a loss of $988 for 2017/18. The loss for 2018/19 was $2,727. The expenses for 2017/18 included $12,944 in respect of the father’s PSI. There was no equivalent expense for 2018/19.
The tribunal asked the father to outline his work circumstances in recent years. He said that he had been employed in a [given] role in the [specified] sector and was moved from that position to the area of [varied roles]. This was the situation until the global financial crisis hit.
The father said that since about 2006 he was employed by three companies, and then set himself up as a contractor. He said he was hired by labour hire companies who sent him to work for various businesses. In 2014 there was still work around but he was restricted in what work he could take and comply with court orders regarding providing care for the children, as to do that he needed to be in [City 1] and much of his work was outside of [City 1].
The father said that he had a contract with [a named business], which was one of his larger clients, and he lost that contract around 2014.
The father said that from 2014 he worked [an organisation] in the [City 1] area, [with listed duties]. This was not limited to the [specified] sector as the [services] he delivered was relevant to other industries.
The father explained that payment for that work was not regular. [Duties deleted.] He was paid after a [project] was completed. He said there was always the promise of more work but that did not eventuate.
The father said that [organisation’s] work was linked to a state government initiative which gave payroll tax benefits to employers whose employees [accessed their services]. Then there was a change of policy, after which this work started to dry up. This is borne out by an information sheet issued by the Western Australian (WA) government on [date].[4]
[4] [Deleted.]
The father said that he was able to pick up some short-term [work] in remote areas but it was piecemeal. Between January 2018 and July 2018, when he worked he earned about $300 a day.
The father had submitted a schedule setting out that his income was $62,719 in 2017/18 and $26,198 in 2018/19. As noted earlier, these figures were recorded as consulting income in the profit and loss statements for [Business 3] for those years. The schedule provided more detail about that income.
In relation to 2017/18, it set out that he earned about $24,500 from 1 July 2017 to 30 November 2017 and about $37,000 from mid-January 2018 to June 2018. These amounts total $61,500, close enough to $62,719.
According to the schedule, he earned $26,198 between August 2018 and March 2019 [in occupation 1] in [a regional area]. He said that from about June 2018 he picked up what work he could around [that area] which was [in occupation 1], usually covering for people who were on leave. Also according to the schedule he came to [City 1] in April 2019 to have the children in the school holidays but the mother withheld them from him. He was not available for work for the last quarter of 2018/19 due to court proceedings.
The father said that he had two short-term jobs between July 2019 and September 2019. With regard to one of them, it was over a four-week period, during which he worked for one day a week for a client he had worked for previously who asked him to update documents he had written some years ago. According to the schedule, he earned $3,000 in this three-month period. This was paid to [Trust 3].
The father said that he has been trying to get work unsuccessfully and concluded that given his age and lack of qualifications, and what the market now requires, he needs to gain a qualification and has enrolled with [University 1] in a [specified] course.
The mother was invited to comment on the work history given by the father. She did not directly dispute anything he said with regard to employment, although she queried payments made to his bank account.
The mother referred to payments from [Agency 1] to [Business 3’s] bank account of $6,770 in November 2017 and $11,000 on 8 December 2017. Her point was that he claimed to have earned about $24,500 from 1 July 2017 to 30 November 2017 yet was paid $17,770 between 7 November and 8 December 2017 (just over a month) which could suggest that he earned more than $24,500 in the five-month period from July to November 2017.
Previous to this the father had said that he was not paid on a regular basis for the [specified] work he did in this period, but only after he finished [individual projects]. It makes sense therefore that most of the payments made to him from [Agency 1] were made towards the end of the period. The tribunal is satisfied that the payments made to [Business 3] between 7 November and 8 December 2017 should not be taken as a guide as to his monthly income during the period July to November 2017.
The mother also said that there was no record of his income from employment in the [Trust 3] bank account for the period January to June 2018. The father said that he was “pretty sure” those payments were made into his business credit card account. He said that he calculated his income during that period based on day rates and the dates that he worked.
Returning to the financial statements, when determining the income for child support purposes for a self-employed person, any expenses they incur in generating that income are taken into account. As recorded above, [Business 3] made a loss of $988 in 2017/18 (after disregarding the provision of $261,194) and a loss of $2,727 in 2018/19. PSI of $12,944 was recorded for 2017/18 with no PSI recorded for 2018/19.
It is usual practice in child support reviews of this type to examine profit and loss statements for expenses that might give a benefit to the business person not available to a person on a similar income via the PAYG system, and to increase the person’s income to take account of any such benefit.
If after making any such adjustments, the person’s income remains below the self-support amount included in the child support formula, then it makes no difference to the rate of child support. The self-support amount was $24,154 for 2017, $24,535 for 2018 and $25,038 for 2019.

The father’s [relative] is an accountant and taxation agent and prepared the financial statements for [Business 3] and other entities. This has given rise to concerns expressed by the mother that the financial statements cannot be relied upon and that they, and other documents such as invoices submitted as corroborating evidence, may have been fabricated to strengthen the father’s case.
The tribunal paid particular attention to the question of the father’s credibility and was satisfied that his account of the changes in his income over a number of years was genuine. It was consistent with what has occurred in the [specified] industry. The tribunal was able to corroborate the claim he made as to changes in state government policy in November 2017, which affected his earning potential.[5]
[5] ibid
The only expenses in the profit and loss statements that suggest they might represent a personal benefit to the father were those related to motor vehicle expenses not connected to working remotely. These amounted to $10,977 for 2017/18 and $7,305 for 2018/19.
Given the father was not working much during these years and the profit and loss statements itemise vehicle costs for remote working separately, the tribunal finds that 80% of the non-remote vehicle costs are taken to be a personal benefit to the father.
The tribunal also checked the costs of accounting services recorded in the profit and loss statements. They were nil for 2017/18 and $1,909 for 2018/19 which were not excessive. The tribunal was satisfied that no adjustment to the father’s adjusted taxable income needs to be made in respect of these costs.
For 2017/18, this means that $8,781 (80% of $10,977) is to be added to the PSI of $12,945, giving an income from employment figure for 2017/18 of $21,726.
For 2018/19, this means that the father’s income from employment is $5,844, being 80% of $7,305.
The tribunal notes that the [Trust 3] had no income or expenses in 2017/18 or 2018/19 (clearly it was not trading).
The tribunal also considered the loans between the various entities.
The [Trust 3] balance sheets as at 30 June 2017, 2018 and 2019 record a non-current asset of $294,694, being a loan made to the father. As it was the balance as at 30 June 2017 and unchanged in subsequent years, the loan must have been made prior to then.
There is a corresponding non-current liability in the same amount at the same dates. The liability shows that the loan to the [Trust 3] came from [Business 3].
What appears to be a draft balance sheet was submitted in respect of [Business 3]. That shows that [Trust 3] owed [Business 3] different amounts at 30 June of the three years as follows: $202,222 as at 30 June 2017, $261,195 as at 30 June 2018 and $285,743 as at 30 June 2019.
That is, there is a discrepancy between the balance sheets of [Business 3] and [Trust 3] in relation to a loan made from [Business 3] to the [Trust 3]. It would make sense for the loan balances to be for the same amounts and they are not.
The question arose as to which entity lent this money to [Business 3] in order for it to lend it to [Trust 3] which then lent it to the father. If the money was lent to the father in the period of interest to this review, then that could be an additional financial resource available to the father. (This relates to the provision for a non-recoverable loan in the amount of $261,195, which was part of the expenses for 2017/18, referred to earlier.)
The money lent to [Business 3] came mainly from [Superfund 3]. The loan increased by $83,521 between 30 June 2017 and 30 June 2019.
At the hearing the father agreed to provide a bank statement or similar to show when monies were drawn from the superannuation fund. However this was not provided.
At hearing the mother pointed out a discrepancy between the 30 June 2019 loan balance of $285,743 (the assets section of the [Business 3] balance sheet) and a document filed with the Family Court [in] April 2019 which showed a balance for the overdrawn beneficiary account of $360,000. It is clear that there was an original amount of $290,000 which was scored through and $360,000 was written above it. The father said that at that time the document was filed with the Family Court, it was an estimate as the financial statements had not been finalised at that stage. It is unfortunate that the bank statements for the superannuation fund were not submitted as directed, as they would have removed any doubt on this point. On balance the tribunal prefers the 30 June 2019 draft balance sheet figure over that included in the document filed [in] April 2019, as the latter had been amended and it was produced part way through the financial year – figures for the financial year were self-evidently yet to be finalised.
The [Business 3] balance sheet shows that loans were made from the [Superfund 3] and [another superfund] to [Business 3] amounting to $85,805 between 2017 and 2019. During 2017/18 [Business 3] loaned $58,973 to the [Trust 3] and loaned $24,548 during 2018/19. The two amounts total $83,521. The explanation for the loan amounts and the differences between the financial statements is not clear.
The father said at the hearing that he had borrowed money from his super fund. It was apparent to the tribunal at the hearing and from various written submissions that the father does not fully understand the various financial transactions between the entities – [Business 3], [Trust 3] and the [Superfund 3]. These were actioned by his [relative] who, as noted, is an accountant and taxation agent.
After the hearing the mother submitted that any borrowings by the father from the superannuation fund represented a resource available to him which should be taken into account as he has had the personal benefit of this cashflow.
However, the balance of the loan to the father from the [Trust 3] has been unchanged since 30 June 2017 according to the balance sheet figures as at 30 June 2017, 2018 and 2019. While these monies would have been a financial resource available to the father in the past, there was no corroborating evidence before the tribunal that they have been available to him during the period of relevance to this review.
The mother also submitted that the writing off of recovery of the loan of $261,194 was a benefit to the father. While this might be so, the tribunal is satisfied that there is no tangible benefit to him in that it does not provide him with funds or another form of asset from which he can pay child support.
The father has claimed during the change of assessment process that he has been supported by his wife and borrowed from people to survive. He has also claimed that they have been house-sitting or living in a caravan.
The tribunal asked the mother if she was aware of anything else that suggested the father had financial resources over and above what he had claimed. She referred to the caravan and the two cars. He said that the cars went through his wife’s business. The tribunal has already increased the father’s income to reflect a benefit from having the use of a vehicle owned by his wife’s business.
The mother referred to a trip to [a named town] in January 2018, which cost the father $3,000 at a time he claimed to have an income of $12,900. The father said in response to this that it was for a surprise [birthday] for his wife, a family get-together which his wife paid for. He believed she had paid the $3,000.
The mother said that the father’s wife had previously claimed to have earned $600 a week, and queried how she could have afforded to pay the amount of $3,000. The mother acknowledged that it was a few years ago when the father’s wife claimed to have earned $600 a week.
The mother also said that the father and his wife live in a caravan that she has priced at $85,000 and he drives a [car brand] and his wife drives a new [different brand]. The father said that none of these assets are in his name. He also said that the assets were in his wife’s name to protect them, a point picked up by the mother in her post-hearing submission. The mother wrote that this indicates these assets were funded/owned by the father but were not in his name. The tribunal does not agree this is necessarily so. There are other possibilities, such that they were jointly funded by the father and his wife. The tribunal also notes that the father said he was trying to avoid bankruptcy and considers this to be a more likely explanation for him referring to protecting assets. The parties agreed there was no property settlement or similar underway.
In any event, the tribunal is not persuaded by the evidence before it that the father has the financial capacity to purchase vehicles. His wife, on the other hand, runs her own business and if she has the capacity to do so, they are her assets (or those of her business) and not those of the father.
The tribunal notes that according to the father, the caravan is their home when they are not housesitting. He said it was purchased two years ago and it was not new. He does not recall how much it cost. He said that the two vehicles are owned by his wife’s business. He said that he drives his wife’s vehicle, [specified] sometimes. The tribunal has already factored in the benefit to him of having access to a vehicle.
The tribunal would be concerned about the wife’s business only if it formed the view that the father was alienating his income and assets by putting them into his wife’s name or through her business. The tribunal is satisfied that this is not occurring in this case. The wife’s business –[business type] - reflects her skills, qualifications and expertise, which the father does not share.
The father said that the legal actions through the Family Court have cost him everything and he had to sell possessions to pay for legal representation. He submitted that he owes his former lawyers, [named], $8,000 in legal fees and they have engaged another law firm which has issued a notice of intention to bankrupt him.
The mother contended that the father was operating bank accounts which had not come to light. The father referred to the investigations by the CSA which had not uncovered other bank accounts than those for which bank statements had already been provided. The father at hearing referred to [a Bank1] credit card account which had not been identified before.
The mother referred to purchases of alcohol that showed on bank and credit card statements. The father referred to those made in December 2017 and January 2018, observing that this was the Christmas period. The tribunal has perused the bank statements that cover a period from late October 2017 to October 2018. While there are a number of alcohol purchases, the tribunal does not consider these to be sufficient to find that the father has a source of income, or has savings, that are to date uncovered. The father has said he does not earn enough to live on and largely relies on his wife to support him. Given the evidence before it taken as a whole, the tribunal accepts this to be so.
The tribunal pointed out that the change of assessment process was an administrative one and was not a forensic examination of a person’s financial situation. Given all the evidence set out above, and the investigations conducted by the CSA through the various change of assessment processes, the tribunal is satisfied that its findings adequately reflect the father’s income, property and financial resources for child support purposes.
The father submitted evidence corroborating his claim that he is enrolled at [University 1]. The tribunal accepts his evidence that he is currently not working at all or only works on occasion. It finds that his income is below the self-support amount for 2019 and 2020.

What is the mother’s income for child support purposes?

The mother’s taxable income was $120,005 in 2105/16, $110,664 in 2016/17, $110,622 in 2017/18 and $118,926.
The mother is employed by [a named agency]. She previously worked for another state agency. She said that she changed jobs about mid-April 2019, but remained on the same salary as she had been acting in her current position since November 2018.
The father disputed her income on the basis that the mother has purchased leave. According to the payslips she submitted, her gross annual pay during October 2019 was $133,296.
The tribunal is satisfied that there is no need to vary the mother’s income for child support purposes to the higher figure as, because of the father’s income, it would have no effect on the rate of child support.

How does the administrative assessment compare with an assessment of child support using the tribunal’s income figures for the father?

When the father lodged the first change of assessment application on 4 December 2017, he was required to pay $7,377 a year in child support, based on an adjusted taxable income of $71,256 for him, and $110,664 for the mother.
The tribunal has found that from the date, the father’s adjusted taxable income was less than the self-support amount. According to the tribunal’s calculations, and using the care percentages referred to in paragraph 2 above, this means that the father would not be required to pay any child support in respect of the children. (The tribunal would emphasise that its calculations of the rate of child support are estimates and the CSA will provide accurate child support assessments.)
In light of the foregoing, the tribunal is satisfied that in the special circumstances of this case, the administrative assessment does result in an unjust and inequitable rate of child support. It finds therefore that a ground for departure from the administrative assessment has been established (pursuant to subparagraph 117(2)(c)(ia) of the Act).

Issue 2 – Is it just and equitable to make a particular departure determination?

As the tribunal is satisfied that there is a ground to depart from an administrative assessment of child support, the next step is to consider whether it is just and equitable as regards the children, the father and the mother to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the tribunal to consider a variety of factors, as set out in subsection 117(4) of the Act.[6]
[6] The tribunal is required to give “overt consideration” to relevant factors listed in subsection 117(4) of the Act: Tyagi & Meares [2008] FMCAfam 886.
Section 3 of the Act makes it clear that parents have the primary duty to maintain their children, and that this duty has priority over all commitments of the parents other than commitments necessary for self-support or the support of another person the parent has a duty to maintain. In this case the father and the mother have the primary duty to financially support their children.

Income, property and financial resources – the father

In addition to the information already set out, in a Statement of Financial Circumstances (SFC) dated 26 September 2019, the father recorded $15,000 in a superannuation fund. The tribunal considers it possible that he has omitted to mention funds invested in the [Superfund 3], of which (the tribunal understands) he is a co-director and member with his wife. In his SFC, under a heading “Information about any other superannuation funds”, he writes as follows:
As I have NOT met a condition of release, there are NIL super benefits available to me. I have NOT made any super contributions since 2012, and my account balances in super have been diminished by life cover, costs and negative investments earnings/capital losses.

100.The only other assets recorded by the father were a trailer worth $200 and $2,933 owed to him by the mother.
101.The father recorded child support arrears of $19,000, that he owed $27,000 to [a named person] who paid legal fees for him and that he owed $7,550 to the ATO. He is paying off the latter in instalments of $500 a month. He did not provide any details of his weekly living costs.
102.The father’s position is that he has little or no income and his wife supports him. Although the SFC requested the information, the father did not provide information as to his wife’s income. The rate of child support does not take into account a partner’s income. However this information assists the tribunal in ascertaining whether or not its decision might cause hardship. In this case the father has stated his wife supports him from the income she generates from her [business].
Income, property and financial resources – the mother
103.According to her SFC dated 20 May 2019, the mother lives with the children in a house she valued at about $535,000. She recorded a mortgage of $317,821.
104.She recorded assets of $491 in bank accounts, about $14,000 in investments, and a 2008 [car brand] worth $5,100. She listed household assets worth $5,000 and superannuation of $268,576.
105.The mother recorded a debt of $2,300 to her mother’s estate, and credit card debts totalling $6,000.
106.The mother estimated her total expenditure to be $2,277 a week compared to her income of $2,275. She said that she lived from fortnight to fortnight.
Other issues pertaining to the parents’ incomes, property and financial resources
107.Subsection 117(7B) of the Act prescribes the circumstances in which a parent’s earning capacity may be taken into account; certain criteria have to be met. These include that the parent has failed to demonstrate that decisions made about their work arrangements were not substantially motivated by the effect they would have on the rate of child support.
108.The tribunal has already discussed the changes in the father’s work patterns and is satisfied that these were a consequence of circumstances beyond his control such as the downturn in the [specified] industry and the policy change made in late 2017 that affected [organisations] for whom he was working at that time. His age and qualifications have contributed to his difficulty finding work.
109.The mother has been in full-time employment as a public servant, earning a similar amount over a number of years.
110.The tribunal is satisfied that it is not open to it to make an earning capacity determination in respect of either parent and need not consider the application of subsection 117(7B) of the Act in relation to either parent any further.
111.The tribunal is required to have regard to the commitments of each parent that are necessary to enable the parent to support himself or herself, or any other child or another person that the person has a duty to maintain (paragraph 117(4)(e) of the Act). There was no evidence before the tribunal that either parent had the legal duty to maintain another person for the period relevant to this review.
Costs related to the children
112.In determining the proper needs of the children, it is necessary to have regard to the manner in which they are being, and in which the parents expected them to be, cared for, educated or trained, and any special needs they may have (subsection 117(6) of the Act).
113.There were no special needs identified in this case or that there were extra costs incurred on behalf of the children that should be taken into account. The mother, in filling out her SFC, allocated various costs between her and the children. There was nothing of particular note. The father did not provide current information as to the costs of the children.
114.The tribunal concluded that using the “Costs of the Children Table” is reasonable in the circumstances of this case for the costs related to the children.[7]
[7] Clause 1 of Schedule 1 to the Act. The table is available at the Department of Social Services website, accessed 8 December 2018: align="left">Hardship
115.The tribunal is required to consider any hardship its determination might cause and is guided by Gyselman and Gyselman[8] in this respect:

[8] [1991] FamCA 93.
This requires the Court to balance the “hardship” which the parents or the children may suffer as a result of either making or refusing to make the order. It is a recognition of the circumstance that in this area there is likely to be hardship both ways and the Court is required to take into account the balance of that hardship and give it the weight which is appropriate to the circumstances of the individual case.

116.It is apparent to the tribunal that the father is in a difficult financial situation and expressed his concern that he might be made bankrupt. The tribunal estimates that its decision will reduce his arrears of child support, which exceed $20,000 including penalties, by about $14,000. His evidence was that his wife supports him financially.
117.The mother is in a better financial situation in that she has a secure job and regular income. From that, she has supported the children financially without regular child support payments from the father. She said, and the tribunal accepts that this is the case, she lives from fortnight to fortnight.
Any other relevant matters
118.The tribunal may take into account any other matters it considers relevant in making a particular departure determination (subsection 117(9) of the Act).
119.The tribunal has found that the father’s income was $21,726 for 2017/18 and $5,844 for 2018/19. The rate of child support is unchanged if a person’s adjusted taxable income is less than the self-support amount.[9] As it would make no practical difference to reflect both figures in its determination, the tribunal has varied the father’s adjusted taxable income to $21,726 for the entirety of its determination.
[9] $24,154 for 2017, $24,535 for 2018 and $25,038 for 2019.
120.In its determination, the tribunal has varied the father’s adjusted taxable income to 30 November 2021 to give the parents some certainty into the future. After this date, the father’s adjusted taxable income will reflect his taxable income for the previous tax year, if his tax return has been lodged by the due date.
121.It is open to either parent to lodge a further change of assessment application if their circumstances, or those of the other party, change in the future, even if that is before the end date of this determination.
Issue 3 – Is it otherwise proper to make a particular departure determination?
122.The requirement to consider whether a departure determination would be otherwise proper is concerned with what is fair to the community; it is preferable for a child or children to be primarily supported by their parents rather than by government assistance. Paragraph 117(5)(b) of the Act means that the tribunal must consider whether the level of a benefit, in particular family tax benefit, received by the party caring for a child or children, may be affected by the level of child support.
123.According to her SFC, the mother does not receive family tax benefit. The tribunal is satisfied that its determination will result in an appropriate apportionment of financial responsibility between the parents and the community, and would be otherwise proper.

DECISION

The tribunal sets aside the decision under review and, in substitution, decides as follows:

· For the period 4 December 2017 to 30 November 2021, the father’s adjusted taxable income is varied to $21,726.

[2019] AATA 6348

2 December 2019

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Judicial Review

Statutory Construction

Remedies

Jurisdiction